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Long Live The Queen Part II

Like the Dow Jones SnP500 is now a fully qualified impulsive i-ii-iii on the weekly chart thus improving the probability of finalizing a i-ii-iii-iv-v rally to the highest possible 90%:

>> SnP500 Conservative EWA:

As far as rallies are concerned: An extended third wave rally is the most effective in providing the investors/traders significant confidence to buy the next pullback (or correction) down.

Unfortunately, as stated in my previous Instablogs and Comments, the deep meltdown of May to Oct 2011 AND the stair-step rallies and corrections of Oct 2011 to Nov 2012 = able to produce a potential Spiral Meltup rally - which can be interpreted in many different ways. Thus we should entertain the possibility of what will happen in the future is not going to be a Basic 1-2-3-4-5 Rally (called a 5-waves rally) but can easily morph into a Spiral Meltup 9-waves rally or the Complex Spiral Meltup Rally of 13 waves. 13-waves rallies are the most complex and the strongest but the hardest to anticipate when and where it would top out.


These are among the possible Scenarios:

>> Dow Jones Aggressive EWA:

>> Rut2K Weekly Super-Aggressive:

>> Rut2K Weekly Super-Duper:

Note that Russell2K may be quite different from SnP500, Dow Jones, and/or Nasdaq but among the four major indexes it is the least predictable as far as Elliott Wave Analysis is concerned. Thus, most of the time, I prefer to not rely on Rut2K analysis. In terms of probability of actually making a Vertical Meltup Rally with shallow pullbacks and/or a potential over-extended 3rd wave rally, R2K is the best candidate to consider. Therefore, if this ongoing rally starts to go past the over-extended ranges as specified in either SnP500 or Dow Jones, better start expecting the R2K super-duper rally can actually happen.


Trading Strategies:

With 4 possible medium-term scenarios that are over-whelming bullish; trying to short the markets can be considered almost stupid if not suicidal. Therefore, the better course of action is to wait for a Pullback Down and try to find the bottom to Swing Trade the next rally on the weekly chart.

- Since the Dow Jones and SnP500 are already 90% bullish; hopefully, the expected <> 8.66% Pullback that may last more or less 9 weeks should happen sooner rather than later.



For short-term trading. The Daily Chart Advanced TA published on my Comments yesterday can be used as a more reliable guide to trading the markets than the EWA's - until the pattern(s) on the daily and/or intraday charts become comprehensible enough for a high-confidence wavecount.

* The YM Extended Target of 15,517 triggered the (precision) profit taking today among those who traded the Positive Reversal Setup on the daily chart. SnP500 extended target range is 1696 as illustrated on SnP500 Daily Chart Advanced TA. Take short-term profits while you can, not when you have to.


** For the Super Bulls who expect extremely shallow pullback; a <> 3.82% that can last 3 to 5 weeks is the next expectation in order to support the SnP500 Daily Chart Conservative EWA.


*** For the Super-Duper Bulls who expect 3 to 5 days pullback or consolidation range; the SnP500 is still qualified to make a Spiral Meltup Rally on the intraday 60min chart with 1694 Nominal Target and an Upper Range of 1729. Nothing is casted into stone (yet) as of today.


**** Major Resistance on the monthly chart is 127.2% Fibonacci Extension of 16,300 for Dow Jones. Since DJ is ahead of SnP500, it is worth watching DJ first as it approaches the 16,300 area - which is a favorite Reversal Fibonacci Level for the Contrarian Traders. As long as nothing substantially bearish crisis actually happens, expect the contrarian traders not to lift a finger until Dow Jones reached the Major Resistance.